The New Zealand dollar rose to a two-week high as gains in equity markets in Europe and the US, and signs of growth in the US housing sector helped lift risk appetite and demand for growth-linked currencies and commodities.

The kiwi dollar rose to 85.64 US cents, and earlier reached the highest since April 15 at 85.74 cents, from 85.20 cents at 5pm in Wellington yesterday. The trade-weighted index gained to 78.77 from 78.47.

The formation of a coalition government in Italy and bets the European Central Bank is set to cut interest rates this week also helped lift risk appetite.

"Risk appetite returned to markets overnight," Bank of New Zealand strategist Kymberly Martin said in a note. "The USD index declined and the NZD was one of the strongest performers."

The Thomson Reuters/Jefferies CRB Commodity Index of 19 commodities rose 1.4 percent. More information on commodity prices New Zealand exports will roll in this week, with the latest GlobalDairyTrade auction results due out early Thursday and the ANZ Commodity Price Index later that day.

The Federal Open Market Committee begins its two-day meeting on US monetary policy on Tuesday and the European Central Bank announces its latest decision on Thursday.

The kiwi rose to 65.37 euro cents from 65.27 cents and climbed to 55.26 British pence from 54.88 pence. It edged up to 82.68 Australian cents from 82.61 cents and gained to 83.69 yen from 83.21 yen.